Sources tell Warren that the initial leaked specs for the Xbox Surface were accurate, including a 7-inch display running at a 1280 by 720 (720p HD) resolution. But he also notes that the Xbox Surface will include a custom ARM processor and speedy RAM. The initial specs we saw in June called for dual IBM Power PC processors and 5GB of DDR3 RAM.

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Microsoft is also keeping the door open for an unannounced Intel processor.

Warren notes that the Xbox Surface is being developed to be architecture agnostic, so Microsoft could potentially go with one of several CPU options. The tablet will be able to perform simple tablet functions like messaging and web browsing, but it won’t run a full version of Windows.

If the spec rumors are true, it’s clear that Microsoft is building the first-ever gaming tablet with the Xbox Surface. The latest-generation iPad and recent Android tablets feature speedy processors and graphics as well, but they’re also built to perform tasks other than gaming. By fine-tuning a tablet for gaming purposes, Microsoft will have something truly unique — and it’ll also be able to tie in the tablet directly with a future “Xbox 720″ console.

Production for the Xbox Surface will be separated from Microsoft’s traditional hardware partners, like Foxconn and Pegatron, Warren says. He’s also heard that the Xbox Surface is being partially developed at Microsoft’s Silicon Valley offices.